Computer Software Development

Report Page Length: 10-12
Last Quarterly Update: 12/7/2009
SIC Codes: 7371, 7372
NAICS Codes: 511210, 541511
Chapters Include:
Industry Overview Trends & Challenges Industry Forecast
Quarterly Industry Update Call Prep Questions Website & Media Links
Business Challenges Financial Information Glossary & Acronyms
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Industry Profile Excerpt

The US computer software development industry involves about 50,000 companies with combined annual revenue of about $180 billion, more than half from sales of packaged products and the rest from custom programming. Large companies include Microsoft, Oracle, CA, and Electronic Arts. The packaged products segment is concentrated: the 50 largest companies hold nearly 70 percent of the market. The custom programming segment is highly fragmented.

Large companies often are involved in both publishing and programming services, while smaller programming firms typically sell their products to publishers.

COMPETITIVE LANDSCAPE

The US economy heavily influences business spending for software products. The success of programming companies depends heavily on strong technical expertise. The success of packaged-software companies depends on technical expertise and good marketing. Small software companies compete mainly by developing packaged products in small niches or producing custom products for individuals. Many small companies form alliances with larger ones to market their products.

The packaged software industry is capital-intensive: average annual revenue per worker is more than $400,000. The custom programming industry is labor-intensive: average annual revenue per worker is about $115,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Packaged software products are generally small programs that can be installed and operated by the customer without assistance, such as an operating system. Business-oriented packaged products may cost thousands of dollars, but most consumer-oriented products cost in the low to mid-hundreds. Custom programming either creates a new software product from scratch, or, more ...

 
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